Budget 2018 was announced on 10 October 2017. This document sets out the main changes in the areas of taxation, social welfare, health, housing, education, employment and other areas. It is an overview and not a complete statement of the measures announced in Budget 2018.
Some of the changes announced in the Budget come into effect immediately. Others take effect from the beginning of January 2018 or later in 2018. Many others have to be finalised before coming into effect.
Some elements of these measures may change when the legislation required to bring them into effect is enacted.
For a full list of the Budget changes that were announced, please see the Department of Finance and Department of Public Expenditure and Reform website, budget.gov.ie.
• The standard rate income tax band for all earners is increasing by €750. This means, for example, an increase from €33,800 to €34,550 for single individuals and from €42,800 to €43,550 for married one-earner couples (January 2018).
• The Home Carer Tax Credit will increase from €1,100 to €1,200 (January 2018).
• The Earned Income Tax Credit will increase from €950 to €1,150. This is relevant for taxpayers earning self-employed trading or professional income in certain cases and for business owner/managers who are ineligible for a PAYE credit on their salary income (January 2018).
• Mortgage interest relief is being extended for remaining recipients (owner occupiers who took out qualifying mortgages between 2004 and 2012) on a tapered basis. 75% of the existing 2017 relief will be continued into 2018, 50% into 2019 and 25% into 2020. The relief will cease entirely from 2021.
Universal Social Charge (USC)
Incomes of €13,000 or less will continue to be exempt from USC in 2018. Once your income is over this limit, you will pay the relevant rate of USC on all of your income as follows:
• €0 to €12,012 @ 0.5%
• €12,012 to €19,372 @ 2%
• €19,372 to €70,044 @ 4.75%
• €70,044+ @ 8%
Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2% (January 2018).
Tobacco Products Tax
The excise duty on a packet of 20 cigarettes increased by 50 cents (including VAT) with a pro-rata increase on other tobacco products, and an additional 25 cents on roll-your-own tobacco. This took effect from midnight on 10 October 2017.
A tax on sugar sweetened drinks is to be introduced on 1 April 2018. The tax will apply to sugar sweetened drinks with a sugar content between 5 grams and 8 grams per 100ml at a rate of 20c per litre. A second rate will apply for drinks with a sugar content of 8 grams or above at 30c per litre.
Benefit in Kind on Electric Vehicles
A 0% benefit-in-kind (BIK) rate is being introduced for electric vehicles for a period of 1 year. This will allow for a comprehensive review of benefit in kind on vehicles which will inform decisions for the next Budget. Electricity used in the workplace for charging vehicles will also be exempt from benefit-in-kind (1 January 2018 to 31 December 2018).
The total social protection budget in 2018 will be €20 billion.
Increases in social welfare payments
Weekly social welfare payments will increase by €5 per week with proportional increases for qualified adults and those on reduced rates of payment (see rates table below). This also applies to employment programmes such as Community Employment (CE), Tús and the Rural Social Scheme (from week beginning 26 March 2018).
• Those aged 26 and under who are getting a reduced rate of Jobseeker’s Allowance will receive the full €5 increase (from week beginning 26 March 2018).
• The weekly rate for a qualified child will increase by €2 from €29.80 to €31.80 (from week beginning 26 March 2018).
• State Pensions will increase by €5 per week with proportional increases for qualified adults and those on reduced rates of payment (from week beginning 26 March 2018).
Working Family Payment
Working Family Payment (formerly called Family Income Supplement) income thresholds will increase by €10 for families with up to 3 children (from week beginning 26 March 2018).
Back to Work Family Dividend
The Back to Work Family Dividend scheme which aims to support families to move from social welfare to employment, and which was due to end on 31 March 2018, will now be retained.
The Fuel Allowance season will be extended by 1 week, from 26 to 27 weeks, into the first week of April 2018.
Free Travel Scheme
An additional €10 million in funding is being provided towards the Free Travel Scheme.
A Christmas Bonus of 85% will be paid in December 2017 to people getting a long-term social welfare payment (minimum payment of €20).
Telephone Support Allowance
A new Telephone Support Allowance at a weekly rate of €2.50 will be introduced for those getting the Living Alone Allowance and who are eligible for the Fuel Allowance (June 2018).
The earnings disregard for the One-Parent Family Payment and the Jobseeker’s Transition payment will increase by €20 per week, from €110 to €130 per week (March 2018).
Rural Social Scheme
The number of places on the Rural Social Scheme will increase by 250.
School Meals Programme
An additional €1.7 million is being provided towards the School Meals Programme for newly designated DEIS schools.
Youth Employment Support Scheme
A new Youth Employment Support Scheme will be introduced in 2018 to support long-term unemployed young people back into the workplace.
Housing, Employment and Business, Education and Childcare
A total of €1.83 billion is allocated to the Department of Housing, Planning and Local Government for housing in 2017.
Social Housing Support
• An increase of €31 million has been allocated to the Social Housing Current Expenditure Programme, bringing the total to €115 million. Local authorities and approved housing bodies are to build approximately 3,800 new social houses in 2018.
• From 2019, an extra €500 million will be provided for the direct building programme, to build an additional 3,000 social houses by 2021.
• Funding for the Housing Assistance Payment (HAP) scheme is increasing by €149 million to €301 million. This will provide for an additional 17,000 households to be accommodated under HAP in 2018 and support the nationwide rollout of the HAP Place Finder Service for people who are in emergency accommodation.
• Funding of €134 million is allocated to the Rental Accommodation Scheme (RAS) to provide for an additional 600 new transfers under the scheme, as well as the ongoing cost of households already supported under RAS.
• Funding of €32 million is allocated for the Repair and Leasing Scheme, which is expected to deliver 800 vacant properties for social housing.
• Funding of €12 million is allocated for a range of Traveller-specific accommodation schemes, to deliver 110 homes in 2018.
• The energy efficiency programme for social homes receives funding of €25 million to improve a further 9,000 homes.
Supports for Homeless People
• The current allocation for homelessness services is increased by €18 million, to over €116 million.
• It is intended that there will be 3,000 exits from homelessness in 2018.
• As part of the development of the Family Hubs programme, 6 new facilities are due to become operational by the end of 2017. An additional €18 million is provided for this programme in 2018.
People in Mortgage Arrears
An extra €5 million is provided for the mortgage to rent scheme, bringing its funding to €22 million for 2018.
Housing Tax Reliefs
Mortgage Interest Relief, which only applies to mortgages taken out by 31 December 2012, was due to end on 31 December 2017. It will now be retained, on a tapered basis, for remaining recipients – owner occupiers who took out qualifying mortgages between 2004 and 2012. 75% of the existing 2017 relief will be continued into 2018, 50% into 2019 and 25% into 2020. The relief will cease entirely from 2021.
A gradual reduction in Rent Tax Relief was announced in Budget 2011. From 2018 onwards, this relief will no longer be available.
Up to €750 million of the Ireland Strategic Investment Fund is being made available for commercial investment in housing finance. These funds will be made available to a new entity, to be known as Home Building Finance Ireland (HBFI), which will increase the availability of debt funding on market terms to commercially viable residential development projects.
Measures to Encourage Supply of Land for Housing
A new scheme is being introduced to refund stamp duty on property transactions in respect of commercial land bought for the development of housing. To avail of the refund scheme, developers will have to start the relevant development within 30 months of buying the land.
A Vacant Site Levy will be charged from 2019 on lands that are suitable for housing but are not being developed. A levy of 3% will apply in 2019, as already planned. The rate will now increase to 7% in the second and subsequent years.
At present, property owners can get full relief from Capital Gains Tax if they retain qualifying assets for 7 years. This period is being reduced to 4 years.
A new, time-limited tax deduction for pre-letting expenses is being introduced to encourage owners of vacant residential property to bring it into the rental market for a minimum period of 4 years. The property must have been vacant for at least 12 months to qualify. A cap on allowable expenses of €5,000 per property will apply. This relief will be available for qualifying expenses incurred up to the end of 2021. It will be subject to clawback if the property is withdrawn from the rental market within 4 years.
An Exchequer allocation of €75 million is provided for a second phase of the Local Infrastructure Housing Activation Fund, which accelerates the provision of public infrastructure to support the development of sites for private housing in urban areas. The fund will also support the delivery of affordable housing on land owned by local authorities, using co-operative housing and similar models.
Remediation, Adaptations and Regeneration
• Funding of €30 million is allocated for the remediation of a further 430 houses affected by pyrite.
• Funding for housing adaptation grants is increased to €53 million to enable up to 11,000 home adaptations for people with disabilities and older people.
• The National Regeneration programme will receive funding of €61 million.
Private Rented Housing
The Residential Tenancies Board (RTB) receives €7 million in funding to reflect its expanded role and commitments under the Strategy for the Rental Sector, including increased inspections of rented accommodation.
Employment and Business
National Minimum Wage
The national minimum wage will increase from €9.25 per hour to €9.55 per hour (from 1 January 2018).
Key Employee Engagement Programme (KEEP)
An incentive is being introduced to facilitate the use of share-based remuneration by small and medium-sized enterprises (SMEs) to attract key employees. Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on disposal of the shares, in place of the current liability to income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on exercise. This incentive will be available for qualifying share options granted between 1 January 2018 and 31 December 2023.
Earned Income Tax Credit
The Earned Income Tax Credit will increase from €950 to €1,150. This is relevant for taxpayers earning self-employed trading or professional income in certain cases and for business owner/managers who are ineligible for a Pay As You Earn (PAYE) credit on their salary income.
• The rate of Stamp Duty on non-residential property increased from 2% to 6% from midnight on 10 October 2017.
• A new scheme is being introduced to refund stamp duty on property transactions in respect of commercial land bought for the development of housing. To avail of the refund scheme, developers will have to start the relevant development within 30 months of buying the land.
• Consanguinity stamp duty relief for family farm transfers is being maintained at 1% for a further 3 years.
• The exemption for young trained farmers from stamp duty on agricultural land transactions continues.
Brexit Loan Scheme
A new €300m Brexit Loan Scheme will provide affordable financing to Irish businesses that are either currently impacted by Brexit or will be in the future. A loan scheme of up to €300m will be made available to small and medium-sized enterprises (SMEs), along with large firms employing fewer than 500 people, to help with short-term working capital needs.
The VAT rate on the tourism and services sector remains unchanged.
Primary and Post-Primary Schools
• There will be an additional 1,280 teaching posts in schools in September 2018.
• In addition, a further 1,091 Special Needs Assistants will be recruited, bringing the total number to over 15,000.
• €2 million is provided to start a pilot in-school speech and language therapy programme.
Higher and Further Education
• There will be 6,000 new apprenticeships and 10 new apprenticeship schemes in 2018.
• 1,000 additional Springboard places will be introduced.
• 2,100 extra places will be provided in higher education to cater for demographic growth.
Child and Family Support
Early Childhood Care and Education Scheme (ECCE)
• From September 2018, ECCE will be extended from the current average of 61 weeks to give an entitlement of a full two years (76 weeks) of care and education.
Additional funding will allow Tusla to recruit staff to facilitate the introduction of mandatory reporting and to make improvements to the out-of-hours social work services.
Health and Environment
• From 1 January 2018, the prescription charge for medical card holders under the age of 70 will be reduced from €2.50 per item to €2 per item. The monthly cap will be reduced from €25 to €20.
• The monthly threshold for the Drugs Payment Scheme will reduce from €144 to €134, from January 2018.
• A new primary care fund will support the development of GP services, the expansion of community intervention teams and the hiring of more Occupational Therapists.
• Additional funding is provided for day services for school leavers with disabilities.
• An additional €35 million will be provided for mental health services in 2018.
• A tax on sugar-sweetened drinks will be introduced from April 2018. The tax will be 30 cent per litre on drinks with over 8g of sugar per 100ml, with a lower rate of 20 cent for drinks with between 5g and 8g per 100ml.
• VAT on sunbed services will increase from 13.5% to 23%.
• An additional €35 million is provided to expand energy efficiency programmes in the residential, commercial and public sectors.
• Funding of €7 million is allocated to roll out the Renewable Heat Incentive Scheme.
• Funding of €10 million is allocated to increase uptake of electric vehicles.